Nir Eyal Advises Canadian Entrepreneurs to Develop Habits, Not Addictions

Posted by Elliot Chan on Apr 23, 2014
Formerly published in Techvibes Media.

On April 16, author and entrepreneur Nir Eyal approached an intimate group of Vancouver entrepreneur with a series of important questions. As a part of the Hooked Workshop sponsored by Work At Play, Eyal explored the concept of habits and addictions in regards to technology. Then he asked us all questions that steered us in the direction of creating habit-forming technology:

“Is your product a vitamin or a painkiller?” Eyal asked. “People want to invest in painkillers. Because painkillers address a burning need. They stop the user’s pain. They have a quantifiable market, they address a clear need and investors want to hear that your product is addressing a painkiller. As oppose to a vitamin—vitamins are ‘nice to haves.’ We don’t know if that vitamin we are taking every morning is actually doing its job.”

Technology is a part of our lifestyle now, whether it is built to alleviate pain or to generate pleasure. But what caused us to Google without considering the alternatives or to log onto Facebook when we should actually be getting work done? According to Eyal, there is only two reason we formed those habits: the frequency of use and the change in attitude. As a business model, that is a good thing.

“First, habits create higher customer lifetime value,” said Eyal. “If a customer uses our product for a longer period of time, then suffice it to say, they are also adding to our bottom line.” Then he added, “Second, we have greater pricing flexibility if the customer forms a habit. So when a user depends upon a product and it becomes a part of their normal routine, we have greater flexibility in changing our pricing structure.”

Growth is vital to a company’s success, but going viral—but being unable to engage customers—turns your company into a “leaky bucket business.” A product must keep customers coming back and through that consistent use, they can’t help but develop a slight loyalty to the product.

Why do we use Google? Because it’s the best right? Not necessarily—stripped of logos and banners, most people can’t even tell the difference between Google and the number-two search engine, Bing. But since we have been using Google for so long, we make ourselves believe that it must be better, because why would we use an inferior product, right? That is how strong habit-forming technology increases defensibility against competitors.

Eyal presented to the crowd the Hook Model, an infinity sign with arrows starting from the top left corner and looping around in a figure eight. This model is designed to assist entrepreneurs and designers aiming to create a habit-forming product, with the hypothesizing process of building a prototype. The Hook Model consists of four phases: Trigger, action, reward and investment.

Eyal quotes the co-creator of Twitter, Jack Dorsey at this point as he explains the method of understanding internal and external triggers of a customer. “[If] you want to build a product that is relevant to folks, you need to put yourself in their shoes and you need to write a story from their side.” So why is someone using your product? What is the trigger? How do you make them use your product as a solution?

According to BJ Fogg, behaviours occur when there is a motivation, an ability to act and a trigger that enables the action to occur. “Here is a key question for us considering how we design our products,” Eyal said. “Should designers move motivation or ability first?” The answer might not be obvious, but Eyal strongly encourages us to move ability first. Making things easier for consumer is always a plus if you want them to do something.

After the action is completed, the user will anticipate the reward. You search Google, you sit and wait for the results to pop up—perhaps your search is over, perhaps you are not so lucky and you need another keyword. “The unknown is fascinating,” said Eyal. That is why we read books, watch sporting events and develop relationships. Variability is a good thing and it helps increase the reward factor for customers.

At last we reach the investment phase of the Hook Model. At this point Eyal suggested that we all consider how we can get costumers to invest in our product after feeling the reward. How do we get them invested? “The investment phase stores value and improves the product with use,” said Eyal. “Because unlike products in the physical world: laptops, phone, the furniture in your house, your car. All these things in the physical world depreciate over time. The more you use them the less valuable they become. They age. However, habit-forming technology, when done correctly have the opportunity to appreciate. The more we use it the better it becomes.”

For example, the larger our library is in iTunes, the more value it has. The more followers we have on Twitter, the more visible our tweets become. And the more we comment on Quora and get up-voted, the more legitimate we are.

So for your next product consider the customer’s daily usage, the habit they’ve formed and the Hook Model Eyal presented in guiding your product into the lives of millions.